The Infosys global supply chain management blog enables leaner supply chains through process and IT related interventions. Discuss the latest trends and solutions across the supply chain management landscape.

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January 31, 2012

Mobile Payment Options

In his previous blog, my colleague Amit Ambekar had talked about various payment types such as Cash on Delivery, Layaway and Buy Now Pay Later. Another payment method which is gaining the importance of late is Mobile Payments. A mobile payment is any payment where a mobile phone is used to initiate, authorize and confirm payments. The widespread uses of electronic commerce and ubiquitous mobile devices have made mobile payments an interesting alternative method of payment for customers and merchants. Currently mobile payments are prevalent in 5 forms -m-wallet, m-banking, contactless card systems, online payment systems, and carrier billing.

In M-wallet payment form, user downloads M-wallet solution on his mobile. Once, M-Wallet Solution is activated, the account and transaction info is stored on a SIM card and subscriber can begin enrolling his/her debit and/or credit cards, which in turn can be used for shopping. M-banking option allows user directly access the subscriber's bank services and information via the mobile device to make payments. Contactless card systems use a short-range high frequency wireless communication technology. It allows customers to pay their bills without swiping their cards. Specialist online payment systems like, Google checkout and PayPal empower users to make speedier payments online and over mobile phones. In Carrier billing form of mobile payment purchases are billed on the subscriber's mobile phone bill.

The mobile payment methods offer unique benefits to customer. They are mainly related to speed and convenience. Contactless mobile payment option cuts down check out time significantly as customers neither have to slide or insert their card into the reader nor do they need to enter pin number. Moreover, the possibility of them forgetting their credit card in the reader or on the counter at the end of the transaction reduces to zero.

Retailers are also realizing a number of benefits from mobile payment options. Fast transaction times move customers more quickly through the payment process, thus reducing longer check-out queues especially during peak season. Increased customer spending, increased frequency of purchases, and increased customer loyalty increase revenues. Reduced cash handling, improved payment terminal reliability, and streamlined payment processes improve operational efficiency and reduce operating costs. Many retailers like Sainsbury's have self-checkout option. Mobile payment options would definitely accelerate the checking out process.

However, mobile payments also provide some challenges to retailers especially on technology front. From customer's point of view security is the most important factor. The biggest fear of customers is that if phone was lost or stolen then a thief could quickly rack up a fortune in transactions. In case of contactless payment options, providing wireless network security in line with PCI DSS standards, could results in significant upfront investment for retailers. They also need to deploy additional point-of-sale equipment capable of accenting mobile payments. Also, the speed at which the transaction is completed should be less than that of the credit card or cash and it should be hassle free. Any extra effort needed on part of the consumers would not help the cause of mobile payment.

Apart from technological challenges, retailers also have some strategic challenges like choosing the type of payment dimension they want to focus on. Because of the associated payment transaction costs, retailers have to decide whether they want to provide mobile payment options to low value (< $10) transactions.

Thus, mobile payment options have potential to generate some significant benefits for the merchants and their customers, provided that retailer are able to handle technological challenges successfully.

January 5, 2012

Has Best of Breed WMS Won the Race?

It is the time of the year when you look back at the predications that were made and how they turned out. I am just going to look at a prediction that was made a while back. In 2006 the analyst community predicted that gap between the Best of Breed (BOB) WMS and ERP WMS has narrowed significantly and it was just matter of time before the ERP vendors caught up with the BOB vendors (1). Today after 5 years the gap still exists (if not widened) and BOB WMS vendors continue to lead the race.

It is no more a WMS race. It is more of a logistics suite race as the vendors have moved from being pure play WMS players to end to end supply chain execution software providers. RedPrairie which was once synonymous with WMS today offers packages for Warehouse, Store, Transportation, Workforce, Visibility, Performance and multi-channel commerce. BOB WMS continue to provide rich functionality and tighter integration to other logistics suites as well as to leading ERP packages. The integration which was once questionable and was one of the reasons for high implementation cost has become stronger over the period thus driving down the cost of implementation.
As SCDigest noted in its editorial the battle has cooled off a bit (2). In the meantime few of the large customers that I have worked with in the last few years have a clear strategy in place. Identify the top 10 or so complex warehouses in the distribution network that needs superior WMS functionality along with complementary products like Slotting, TMS, WFM and choose the Best of Breed WMS that is aligned to their complex requirements. The simpler warehouses go with the ERP WMS. I think for now this is a great strategy to follow.  Gartner's supply chain systems guru Dwight Klappich calls this as a hybrid application environment and says more than 50 percent of the companies that are defined as supply chain leaders favor this strategy (3).
The one thing that continues to haunt the best of breed WMS providers is the cost of implementation. Most of the implementations are done by the vendor's in-house service teams and their lack of partnership with leading system integrators means they can demand premium billing which drives up the cost of implementation (I may be slightly biased here as I work for a system integrator).
As I conclude, this race may be too early to call even after five years but I can make a bold prediction for the New Year that BOB WMS will continue to lead the way for atleast next 5 years.

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